In this together: how the crowd can help.
Cleantech – products or services that help diminish the negative impact on the environment – has become a fast-growing and attractive investment choice for many. As the effects of the climate emergency only get more apparent and the public grows more conscious of their choices, this trend is set to grow even more rapidly. This is especially the case in the UK, where our low carbon economy is now worth more than £200bn and we were labeled a ‘leading nation’ for cleantech investment in 2021, securing over £134 billion of investment.
For businesses in this thriving space to keep growing, it’s more important than ever to tap into the power and potential of ‘the crowd’. By communicating their purpose and vision clearly, founders can mobilise a passionate community of investors to help them on their journey.
From customers to investors
When referring to ‘the crowd’, I mean the community of millions of retail investors who want to support businesses they believe will, and often do, succeed. Today’s consumers are ever more aware of their financial choices, and those who can afford to align their values with their spending are increasingly doing so. What Crowdcube’s successes – specifically in the cleantech sector – show, is that people are no longer satisfied with being passive consumers anymore. They want to take that support to the next level and become active enablers of the company.
Entrepreneurs in cleantech can leverage that latent consumer demand and turn it into a community of passionate investors. There are a number of benefits that having such a large number of financial backers brings, chief among them being the fact you have a ready-made army of advocates spreading the word about your cleantech solution. It also grants you access to a larger – and often particularly well-informed – network of people sharing ideas about a company’s cleantech solution and business model.
One such investor is Alayne, a 72-year-old ex-climatologist at Swansea University. She invests in dozens of innovative cleantech solutions on our platform, including The Small Robot Company and Orbital Marine Power. She also keeps in touch with the founders or investor teams of the companies she invests in and is able to provide a career’s worth of academic experience as insight into the climate, creating mutual benefit to both parties.
But Alayne is not alone. She is one of the hundreds of thousands of investors backing green. Our recent data suggests climate-conscious ventures are attracting seven times more investment from retail investors on our platform compared to years ago. From March 2021 to April 2022, the annual investment into green and sustainable companies has risen from £5.5m in 2017 to £41.1m.
Lean on the crowd
Entrepreneurs and founders know all too well that funding can be the make or break of their venture, there is no doubt that equity crowdfunding, alongside traditional avenues like venture capital, should form part of that process. Crowdcube’s own data shows private equity crowdfunding is becoming a particularly worthwhile path for green and sustainable businesses: the average green pitch on our platform attracts 29% more investors than those which do not prioritise sustainability.
Shouting about your purpose
When comparing other asset classes, nearly a third of investors’ values are not reflected in their portfolios, according to recent research from Oxford Risk. When it comes to ESG, many are being let down by asset managers, leading them to underinvest in what matters to them. Luckily, it is a lot easier today for people to align their portfolios to their vision for the world, thanks to the rise of crowdfunding platforms and investment apps. And this is why communicating on purpose matters; budding start-ups and scale-ups must be sure they are speaking to the hearts and minds of their investors, not just
their wallets.
But there’s another reason to this too: sustainable companies today are clamouring for attention alongside greenwashers, leaving well-intentioned consumers and investors alike struggling to separate the two. For example, last year, global research by the Competition and Markets Authority found that 40% of firms’ green claims could be deemed misleading.
Next steps
For founders and entrepreneurs in this thriving space to keep growing, it’s more important than ever to tap into the potential of ‘the crowd’. Equity crowdfunding enables customers to become shareholders of the brands and businesses they personally want to support, meaning both sides are united by a shared purpose. By communicating their purpose and vision clearly, founders can mobilise a passionate community of investors to help them through their journey.
